Zopa | Disruption and Response Oliver Wyman Institute – James Alexander 15th October 2015

2004No garage, no idea

Ethnographic perspectiveSelf-reliant freeformers will become the dominant audience

Socio-economic perspectiveWe’ve been here before – a new common sense

Industrial Revolution

Steam and railways

Steel, electricity, heavy

engineering

Industrial Consumer Ageof oil, automobiles, mass production,

distribution and retail

Digital Consumer Age

of information technology and

resource scarcity

• Economies of scale and scope• Hierarchical and market power• Broadcast brand• Short-term shareholder value

• Digital network economies• Collaborative and connected success• Purpose-led, conversational brand• Long term stakeholder value

Source: Adapted and developed from Carlota Perez ‘Technological Revolutions and Financial Capital – the Dynamics of Bubbles and Golden Ages’

Technology Revolutions

The world’s first marketplace where people meet to save and borrow money. With no bank in the middle, everyone gets a better dealSavers

• Great Returns

• It’s human

• It’s safe

• You’re in control

Borrowers

• Low, low rates

• No banks

• It’s fair

6

Zopa.com, Launched May 2005

A marketplace where people meet to save and borrow moneyDisruption from structural and operating advantage

Source: Adapted and developed from Carlota Perez ‘Technological Revolutions and Financial Capital – the Dynamics of Bubbles and Golden Ages’

Financial return and social reward Working, differentiated, compelling• Most trusted provider

• Great customer service

• >£1.1Bn through Zopa

• Cheapest personal loans

• Lender returns >5%, after fees

• Appropriately risk managed – and Safeguard fund now in place

77

Creating value for customersFinancial return and social reward

UK P2P Cumulative Volume>£4.5Bn and still accelerating

8

A marketplace where people meet to save and borrow moneyDisruption from structural and operating advantage

DisruptionChanges the way a market operates for customers and the competition

• LV=

Innovation is…

Disruption is…

Finding new and better ways to fulfil an organisation’s purpose

When a market ceases to function in the established manner, typically demonstrated by rapid, large and irreversible changes

There is increased value for customers that sticks and stays

There is a decrease in value in the market as traditionally

defined, at least for a while

Customers

The longer I stay the better it getsThe better it gets the more satisfied I amThe more satisfied I am the more I trust

The more I trust the less I look elsewhereThe more I’m satisfied the more I recommend

The more I recommend, the better it gets, for me

For the disruptor

We pay less for acquisitionWe pay less to service

We have lower loss ratiosWe have more to reinvest

We create better customer solutionsWe have more opportunity to differentiate

We can campaign against toxic practices

A changed value creation dynamic is established …

9

A marketplace where people meet to save and borrow moneyDisruption from structural and operating advantage

Schumpeter’s “gale of creative destruction”A new common sense

• Economies of scale and scope• Hierarchical and market power• Broadcast brand• Short-term shareholder value

• Digital network economies• Collaborative and connected success• Purpose-led, conversational brand• Long term stakeholder value

The Industrial Consumer Age The Digital Consumer Age

Currency exchange

Loans

Risk assessment

Financial management

Transfers & micro-financing

Angel funding

Blockchain and Crypto-Currency

Payments

Credit card issuing/authorisation

Transactions

Cheque deposit

Investment management

Banks rarely trusted

Regulation constraining

Legacy everything

Commoditisation endemic

Fixed cost base too

high

Value creation mis-matched

Savvy customers

Switching

10

A marketplace where people meet to save and borrow moneyDisruption from structural and operating advantage

e.g. Collaborative consumptionCreating enormous customer and business value

Vulnerabilities

Redundancies

Waste

Limited access

Broken trust

Better utilisation

Empowerment

Directness (e.g. in the value chain)

Reduced cost to serve from crowd service

Enablers to make the system work

Safe & secure

Create & enable trust between strangers

Build trust in the brand

Put the customer in control

Create a quality market

Create social currency & gaming fun

Transparent & open

Be in it for the long term

Advantages

Complexity

Simplicity

Efficiency

Identify the fundamental customer needs (or failure of the existing business model)

Create and grow a real operating advantage

Use the business model to deliver increasing customer benefits

Grow critical mass, creating a virtuous circle of customer benefits, reduced costs and increased profit and revenue

Build a community with mutual benefit and a sense of belonging

Better offer & social reward

$6Bn $1Bn$25Bn$50Bn

Open eyes to the inconvenient truthDeliberate focus and attention to also see the world outside-in

Courageous leadership to embrace disruptionProviding clarity and energy to act and learn

The world’s leading open foresight program

Thank you

jamesalexander1969@mac.com|@jamesgreenthingwww.futureagenda.org